Domestic pension funds have made a record investment of Rs 41,242 crore on a net basis in equity markets during the first nine months of 2025, according to the NSE data.
In August 2025, inflows in the New Pension System (NPS) category stood at Rs 7,899 crore, the highest level seen in recent months. During September, net investment under the NPS category was Rs 7,867 crore, marginally lower compared with the previous month.
In the last four years, there has been a consistent surge in equity investments by pension funds under the NPS category, the NSE’s monthly category-wise turnover data from domestic institutional investors (DII) showed. Net inflows surged from Rs 629 crore in 2021 to Rs 2,788 crore in 2022, more than doubled to Rs 6,027 crore in 2023, and further to Rs 13,329 crore in 2024.
Strong returns in recent years have attracted DIIs, largely comprising mutual funds, insurance and pension funds, toward the stock markets, experts said.
“Stocks are regarded as the best performing asset class over the long run. The strong preference for equities has led to a higher inflows from insurance, mutual funds and pension funds into the markets,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.
Market experts also attributed the surge in inflows to the Pension Fund Regulatory and Development Authority’s (PFRDA) recent norms which raised the investment limit for pension funds in equity and related instruments. Effective April 1, 2025, pension funds can invest up to 25 per cent into equities and related instruments, up from 15 per cent earlier. Additionally, they are permitted to invest not only in large-cap stocks but also in mid-cap stocks.
“Pension funds are required to deliver a certain level of returns every year. Earlier, they achieved higher returns through investments into fixed instruments but this is not possible now. The increased investment limit in equity instruments now gives pension funds leeway to invest more in equities, helping them to meet their target of higher returns,” said a fund manager.
Story continues below this ad
The NSE data also showed that DIIs have invested Rs 4.93 lakh crore into the domestic equity markets between January-September 2025. DIIs net invested Rs 82,876 crore in August 2025, which was the highest in the current financial year.
Mutual fund players pumped in Rs 4.12 lakh crore on a net basis into the stock markets between January-September 2025, with August recording this year’s highest monthly investment of Rs 68,584 crore in this year, the data showed.
Net equity purchases by insurance players reached Rs 54,373 crore in the first nine months of 2025, compared with Rs 23,062 crore during full year 2024, showing a growth of over 100 per cent.
© The Indian Express Pvt Ltd